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CHRIS MATTHEWS, HOST: Obama zooms in Pennsylvania, Ohio and other battleground states. Is this the post-Hillary bounce?

Let‘s play HARDBALL.

Good evening. I‘m Chris Matthews. Welcome to HARDBALL. Barack Obama did something today that tells you just how different a Democratic candidate he hopes to be. It wasn‘t the fact he released that his first general election TV ad, it‘s where that ad is going to run, in 18 states, including some where the Democrats haven‘t been competitive for decades. As Maxwell Smart would say, would you believe Alaska or North Dakota for a Democrat?

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: They taught me values straight from the Kansas heartland where they grew up, accountability and self-reliance, love of country, working hard without making excuses.

(END VIDEO CLIP)

MATTHEWS: We‘ll take a closer look at that TV ad and six key battleground states. You may be surprised at what some of the new polls are showing.

Plus, in this corner, Michelle Obama. In that corner, Cindy McCain. Cindy McCain this morning seemed to question Michelle Obama‘s patriotism, just as Michelle Obama was in the middle of an image-burnishing media blitz. Is this how you run for first lady?

Also, with his huge fund-raising advantage, Obama today reversed course and opted out of public campaign financing. Does that make him a hypocrite, a smart pol or both? That and more in the “Politics Fix” tonight.

And in the HARDBALL “Sideshow” tonight, which possible Barack Obama running mate just showed up at a campaign rally with John McCain?

We begin with NBC News political analyst Charlie Cook, who writes “The Cook Political report,” and Jeff Zeleny of “The New York Times.” Gentlemen, thank you for joining us.

Let‘s take a look at these amazing new poll results. Pollster.com averages all the polls together. In Ohio, the Buckeye State, a state that is called the bluest of the red states, right now looks like it‘s turning blue, you‘ve got Obama up now 46-42, a state he lost to Hillary.

What‘s going on there, Charlie Cook?

CHARLIE COOK, “COOK POLITICAL REPORT,” NBC POLITICAL ANALYST: Yes, this is close. I think it‘s probably a little bit closer than that because I think with a lot of these state polls—you know, we get spoiled looking at the NBC/”Walt Street Journal” and Gallup and all these polls, and some of these are a little shakier. But clearly, when you‘ve got a 4, 5, 6-point lead, as Obama does nationally, you know, you‘re going to be looking you may be on the sunny side even in a state as tough as Ohio.

MATTHEWS: Jeff, those numbers are crossing. If you notice there—let‘s take a look at that poll again. I love it when the cross because it shows you two things are happening. McCain‘s fading in Ohio a tad and Barack‘s rising. And those tads make all the difference in that 40-degree area, 40-percent are there. What do you make of Ohio, which is always a fascinating state politically?

JEFF ZELENY, “NEW YORK TIMES”: I think one thing you have to say, look, it‘s a stronger year for Democrats just in terms of the mood of the country. But the candidates really have not started going head to head with one another in Ohio or Pennsylvania. The mood of Ohio, you know, is certainly reflected by the interest in the Democratic primary there. Senator Clinton did very well. But this certainly shows that Senator Obama is going be competitive with Senator McCain, which we knew all along.

Senator Obama‘s gotten a lot of—or at least some bit of a news bump now. He‘s been on the news a whole lot. The governor of Ohio has recently endorsed him, et cetera. So you know, we‘ll see if these numbers are the same three months from now or four months from now.

MATTHEWS: Let‘s go to the Keystone State, Pennsylvania, which may well be the keystone state. This state was a lot of trouble for Barack Obama. He lost by 9.4 to Hillary. And there he is starting to spike. Look at this numbers going up to 50 percent, almost. That is good news for him. And I hear different reports coming out of Pennsylvania, and I don‘t know if there‘s a Bradley effect up there or not, white people who are saying one thing. I don‘t know. What do you think, Charlie?

COOK: Yes, I‘m not a big fan of the Bradley theory of an African-American underperforming on election day what they polled. I don‘t think we‘ve seen much of that this year. Nine points is a lot. I‘m not sure that Obama‘s nine months ahead, but I think he does have an advantage. And we had had that in the toss-up category...

MATTHEWS: So you believe the 49? You don‘t believe it‘s...

(CROSSTALK)

COOK: I think 6, 7, 8...

MATTHEWS: Yes.

COOK: ... something like that, maybe not 9. Nine‘s an awfully big number. We‘ve had that in the toss-up category and thinking about moving it into “lean Democrat.” But it still can be very, very competitive.

MATTHEWS: You‘ve still got it toss-up.

COOK: Yes.

MATTHEWS: And I think you may well be right because I do think there are people that aren‘t quite sure of this new kid on the block. And it may have something to do with ethnicity, it may have a whole lot to do with class.

Jeff Zeleny, your thoughts about Pennsylvania. Again, I think a state

in this case, it‘s the reddest of the blue states, the most culturally conservative of the regularly Democrat states.

ZELENY: No question at all, and Senator Obama knows exactly what his challenges are in Pennsylvania. He saw them firsthand when he was campaigning there for some seven weeks. He thought he would do better there. He always said he would lose. But he was campaigning with Senator Bob Casey all over the state. But if you look at the results from the primary, he did not win any of the center part of the state and did not perform nearly as well in the Philly suburbs as he thought he would. So he knows what his challenges are.

And the campaign has started to add people and resources and staff, but not that aggressively yet. So Pennsylvania, like all the others, it‘s going to be a challenging state for him.

MATTHEWS: OK, let‘s look at Wisconsin. There‘s a 6-point lead over McCain. Let‘s keep going here. Wisconsin—let‘s take a look at the next state after that. Keep looking. There‘s a pick-up of—substantial—in Virginia, always an interesting state. Here‘s a state where it‘s tied. Charlie, it looks to me like McCain‘s coming down. Barack‘s not really growing that much. Is that really a bridge too far for a Democrat, to win the Old Dominion?

COOK: I would compete very hard in Virginia if I were Barack Obama. I mean, I‘m still a little skeptical about whether he wins it, but he can make John McCain spend a fortune there. John McCain cannot win the presidency if he loses Virginia, and this is where Obama can use his money to great effect. And hey, there‘s an outside chance he can actually pick it off.

MATTHEWS: Yes, I think it‘s close. I think the fact that he won the primary there tells you that a lot of people who are normally conservative were thinking about him. But he has to win Republicans, too.

COOK: If McCain didn‘t have the Navy connection with the strength of the Tidewater, I really think that Virginia would go Democrat. That may be the one thing that pulls it back into neutral.

MATTHEWS: The Norfolk connection.

COOK: Right.

MATTHEWS: Let‘s take a look at Michigan. It‘s one of the—by the way, gentlemen, we‘ve all seen these polls coming out of Washington that show that among others, the three states the Republicans really hope to pick up from the Democrats last time are Michigan, Pennsylvania and New Hampshire. It‘s, by the way, the three states the Democrats most fear they‘ll lose. Here‘s a state, Michigan, with all the problems with Kwame Fitzpatrick, the mayor there, the potential concern again about the auto industry declining out there. Take a look at this number, Jeff Zeleny of “The New York Times.” Look at that, a modest climb out there for McCain. McCain‘s got to be looking at Michigan, right?

ZELENY: He absolutely is looking at Michigan. And one of the reasons is Senator Obama—that is probably one of the areas where he is least known or known the least. He did not campaign there at all in the primary. He was there this week for a couple days, and I was there with him, and he had his endorsement from Al Gore there. The crowd was enthusiastic, but this is a crowd of people that does not necessarily know him. And they‘re not convinced that he is going to help them on the economy, which is the central issue. He was talking about, you know, green energy and things. This is an automotive state still. It‘s hurting, but this is a tough state for Senator Obama. He knows that. They have a big vote registration drive going on in Detroit. That‘s one of the things that they‘re hoping...

ZELENY: ... helps add new voters to overcome some of the skeptical voters there might be.

MATTHEWS: Let‘s take that troubling state of Florida—Florida, Florida, as Tim used to say, in Florida, it was—it was big race in 2000, troubling result down there, still kind of murky, what happened there. Here we have another race looking like 2000 again. Look at those numbers coming together. That‘s always scary. It looks like they‘re converging. McCain‘s ahead by 2 points. That seems to me still a bridge too far for Democrats. That‘s a hard one down there.

COOK: I agree. I kind of think that McCain is doing a little better than this in Florida and that Obama might be doing a tad bit better in Michigan than what we saw a minute ago.

MATTHEWS: You think it‘s worth putting someone on the ticket, Jeff, if you‘re a Democrat, that can give you a shot a Florida, like, for ethnic reasons, Eddie Rendell of Pennsylvania, who‘s Jewish and might do well in southern Florida, south Florida, or Hillary Clinton, who just has a whole lot of, a boodle of support in south Florida? Is it worth going for it, do you think? Do they look at it that way?

ZELENY: I think if that‘s the only reason you‘re going for it, it‘s probably not worth going for it. Look, we never know exactly how much a running mate is going to help or not.

ZELENY: ... he didn‘t at all. And there‘s not going to be someone (INAUDIBLE) watch Jacksonville in Florida. Senator Obama‘s going there tomorrow. Jacksonville is one of the most interesting places in the 2000 recount, a lot of African-American voters, a lot of unregistered voters, the Obama campaign believes. So I think that‘s going to be one of the most interesting cities in the state of Florida, if Senator Obama has a chance, and it‘s still a big “if.”

MATTHEWS: OK, let‘s take a look at Obama‘s new ad because this is an ad really clearly aimed at working people. I don‘t know whether you say—everybody says this now, working white people, whatever. He‘s done so well with the African-American community. Here he is with an ad clearly aimed at establishing him as really sort of a Norman Rockwell American.

(BEGIN VIDEO CLIP)

OBAMA: I was raised by single mom and my grandparents. They didn‘t have much money, but they taught me values straight from the Kansas heartland, where they grew up, accountability and self-reliance, love of country, working hard without making excuses, treating your neighbor as you‘d like to be treated.

(END VIDEO CLIP)

MATTHEWS: Well, that‘s everything, Jeff, politically in America, what he just said. That‘s the American sweet spot, if you will.

ZELENY: It certainly is. And this is sort of a prelude to a biographical tour that Senator Obama is probably going to do some time in the next month, month-and-a-half. It‘s going to begin in Hawaii, at Punchbowl (ph) Cemetery, where his grandfather‘s buried, on to Kansas, on and on and on.

So what the Obama campaign is trying to do is take this back to the very beginning. He would not be in this race if it were not for his biography. Of course, it‘s gotten muddied up a little bit, you know, in the last 16 months or so, but they‘re trying to take this back to the very beginning of the campaign.

And more interestingly, though, is where this ad is being run, in some states that you mentioned. You know, but when you have a lot of money, you can do that.

MATTHEWS: OK. Let‘s take a look, by the way—I want to talk about this before we get to that. (INAUDIBLE) He always said when he was growing up in his book, his wonderful book, that he never liked talking about the fact he had a white mother because he thought that was pandering to white people, like saying, Don‘t you like me? I‘m mixed background. Don‘t you like me more than you would otherwise, if I was just African-American? He seems like he‘s gotten past that. He‘s clearly out there advertising his mixed background.

COOK: You know, that‘s being cynical about this. The thing is, look back at that NBC/”Wall Street Journal” poll, 16, 17 percent, something like that, say the country‘s heading in the right direction. But a 16-point margin, they want a Democrat in the White House. If Barack Obama—if he could get people, voters‘ comfort level up with him, he wins, period.

MATTHEWS: Vote Democratic.

COOK: But if he appears to be too much of a risk, this ad is a great ad to start trying to make people feel a little bit more comfortable.

MATTHEWS: This the counter to the Hillary ad at 3:00 o‘clock in the morning, right?

COOK: Yes.

MATTHEWS: Yes. This is the reverse.

COOK: The thing is, people have to—Obama‘s got such a very odd background. And being black is the least odd. I mean, it‘s so unusual that people have to learn how to relate to him. And this ad, I think, helps to kind of move people that way.

MATTHEWS: Jeff, take a look at the geography of this election here. It‘s interesting. These are the 18 states—we‘re looking at a map right now—we‘re going to look—here it is—where he‘s running these ads. A lot of options out there. Look at this—Nevada, Colorado, New Mexico. That‘s what Tim Russert, our late colleague, used to talk about all the time, those three option (ph) states. Then you add to that North Dakota, where I was just at, Montana. Let‘s just talk about those Western states. Are they credible as Democratic targets, sir?

ZELENY: Well, we‘ll see. I mean, he certainly performed well in the Democratic primary, but that is the Democratic primary. But look, what does it cost him to advertise in these places? Not very much at all. He‘s going to be on the air in North Dakota, Montana, Alaska. It certainly gets us talking about this. And what it does, it raises at least a bit of concern among Republicans that...

ZELENY: ... we‘re not exactly sure where we‘re going to have to compete this year. It‘s not the old playbook. But you know, at the end of the day...

(CROSSTALK)

MATTHEWS: This is 30 seconds over Tokyo. This is 30 seconds over Tokyo.

ZELENY: We‘ll see how much money they‘re putting in after Labor Day.

But right now, why not?

COOK: Chris, I don‘t want to offend our NBC affiliates in North Dakota, Montana and Alaska, but let‘s face it, the TV time there is close to free. I mean, from Obama‘s warchest, he can bombard these states, and you know, hey, maybe it works, maybe it doesn‘t. Probably doesn‘t, but it doesn‘t cost much. And he is going to be spreading McCain everywhere because he‘s got that financial advantage.

MATTHEWS: Welcome back to HARDBALL. Some Republicans are beginning to think that they can make Michelle Obama a drag on her husband in the general election, apparently. And now even John McCain‘s wife appears to be getting into that attack. Here‘s HARDBALL‘s David Shuster with the report.

(BEGIN VIDEOTAPE)

DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over): Today in an interview on “Good Morning America,” it was Cindy McCain who raised questions about Michelle Obama‘s patriotism.

CINDY MCCAIN, JOHN MCCAIN‘S WIFE: You know, everyone has their own experience. I don‘t know why she said what she said. All I know is that I‘ve always been proud of my country.

SHUSTER: The reference was to this remark Michelle Obama made in February.

MICHELLE OBAMA, BARACK OBAMA‘S WIFE: For the first time in my adult lifetime, I‘m really proud of my country.

SHUSTER: Immediately, Obama tried to clarify the remark, saying she was referring only to America‘s politics. She‘s had to address the issue repeatedly, most recently yesterday on ABC‘s “The View.”

MICHELLE OBAMA: Just let me tell you, of course I‘m proud of my country. Nowhere but in America could my story be possible.

When I talked about it in my speech, what I was talking about was having a pride in the political process. People are just engaged in this election in a way that we haven‘t seen in a long time, and I think everybody has agreed with that.

SHUSTER: But even Obama supporters agree Michelle Obama‘s image has taken a hit, largely because what they call unfair attacks from conservative media outlets.

SEAN HANNITY, FOX NEWS: Michelle Obama doesn‘t seem to have many nice things to say about America. And she even sounds really bitter.

UNIDENTIFIED MALE: This week, Michelle Obama still sounds angry!

SHUSTER: So now the woman who the Obama campaign considered an asset in the Democratic primaries...

MICHELLE OBAMA: I grew up on the south side of Chicago.

SHUSTER: ... is in the midst of a national media tour. She helped “The New York Times” with a front-page profile, is on the cover of the latest “US Weekly” and made that hour-long appearance yesterday on “The View.”

MICHELLE OBAMA: I have to be greeted properly. Fist bump, please!

SHUSTER: The ABC program is a place where women can express their opinions and talk about their life in a soft, welcoming environment. Obama spoke about being misunderstood.

MICHELLE OBAMA: When you put your heart out there, there‘s a level of passion that you feel, and it‘s a risk that you take.

SHUSTER: And she discussed her fashion challenges.

MICHELLE OBAMA: I stopped wearing pantyhose a long time ago because it was painful, and they‘d always rip. And I‘m 5-11, so I‘m tall. So nothing really fits.

SHUSTER: But all accounts, Obama was personable and warm, and this, say her friends, was the real Michelle Obama.

SHUSTER: And speaking of what she wears, check out the dress. Her appearance was such a hit that customers have been flooding the store where the dress is sold, forcing the retailer into overdrive to produce more.

(on camera): First ladies, of course, are often trend setters. And in the effort just to get to the White House, Michelle Obama‘s not only featuring likable apparel, but is also trying to show that her personality will be popular, too. I‘m David Shuster for HARDBALL in Washington.

(END VIDEOTAPE)

MATTHEWS: Well, that‘s David Shuster, our fashion editor. (INAUDIBLE) Michelle Bernard is an MSNBC political analyst, the president of Independent Women‘s Voice, and Joan Walsh editor-and-chief of Salon.com.

Joan, I‘m dying to hear what you think about this because It‘s odd, and I‘m not sure Cindy McCain went over the line at all. But what do you think, in basically interposing or counterposing her view of her country with what she says is Michelle Obama‘s feeling toward her country?

JOAN WALSH, EDITOR IN CHIEF, SALON.COM: Yes. Why? Why did she do that?

Chris, I just didn‘t think it was very classy. Laura Bush said that we should all be kind to Michelle Obama and take her at her word that she didn‘t mean anything untoward or unpatriotic. And I certainly agree with that. I think that “proud” remark has been overhyped and overanalyzed. There‘s nothing else in her background or her record to suggest that she‘s not patriotic.

And, so, you know, also, Cindy McCain, that poor woman, she endured a whisper campaign by, you know, people associated with the Bush administration—the campaign—excuse me—in 2000 about her daughter, about her own health and legal problems. She is the last person who should be kind of talking in innuendo about somebody—about a political opponent. I just thought it was beneath it.

MATTHEWS: OK.

Joan, what are—what are—what are the rules of engagement amongst between spouses? I mean, they‘re not technically running for office.

MATTHEWS: They‘re supporting their spouse, who is running for office, and they‘re talking about another spouse of someone running for office. What are the rules of engagement? Are they permitted to take shots, or is it wrong, just per se?

WALSH: I...

MATTHEWS: Like baseball players making fun of each other in the newspapers always drives me crazy. What‘s the rule among spouses?

WALSH: Well, it drives you crazy. And it often backfires with baseball players. You have heard hundreds of interviews where people took off-field mocking and turned it into on-field motivation.

MATTHEWS: Yes.

WALSH: And I hope that Michelle Obama is sitting there being—being classy, being restrained, and being determined never to lower herself to fight like that.

But you‘re right, Chris. There are no—there really aren‘t rules of engagement. We will have to write them. You know, we all kind of wondered at the Bill Clinton vs. Michelle Obama face-off, which never got really personal like this.

You know, I would just rather not see it. I would rather that they both stick to policies, stick to, you know, being a support to the real candidate.

MATTHEWS: Right.

WALSH: I don‘t mean anything sexist by that, because I certainly wish that the would-be first husband had done a little bit more of that. It‘s not a gender thing.

WALSH: It‘s really, who is running for president? What is the role of the spouse?

(CROSSTALK)

MATTHEWS: It‘s tricky, Michelle.

WALSH: It is.

MICHELLE BERNARD, NBC POLITICAL ANALYST: One of the things Joan

mentioned in her blog on Salon.com that I agree with is, when you‘re talk -

also, when you‘re talking about political spouses, you don‘t want to look like you have got two women in a catfight. It reinforces the stereotype that women can‘t get along, women can‘t have honest policy discussions, women can‘t talk about politics without the claws coming out.

And that‘s the risk that Cindy McCain has taken when she makes these kinds of comments. And the other thing that you have to worry about from the Republican standpoint—and I think I would urge Cindy McCain to sort of stay out of it—is that we have gone from people attacking Barack Obama as the scary black man, to now the scary black wife who might be in the White...

I have people send me e-mails saying, she is know better than a Black Panther. She doesn‘t belong in the White House. And those are the kind of people that folks don‘t want to deal with.

MATTHEWS: OK. Let‘s be nuanced, then. She does come across as more aggressive than he does in terms of—as a social critic, right? Fair?

BERNARD: No, I think that‘s a fair criticism—or maybe not necessarily a criticism, but a way of looking at some of the statements that she makes. She has a very different type of...

MATTHEWS: When you say “This is the first time I have been proud of my country,” there are a number of ways to say that you didn‘t mean that. But there‘s only one way to acknowledge it. “Yes, I said that.” And she did say that.

BERNARD: And she did say it.

WALSH: She did.

BERNARD: She said, “For the first, I‘m really proud of my country,” which is a little bit different than, “For the first time, I‘m proud of my country.”

MATTHEWS: Yes.

BERNARD: Look, she—this is—it‘s unchartered territory. She‘s very different than Cindy McCain. She‘s very different than Laura Bush. And she‘s very different than in her presence than—than Hillary Clinton.

And I think it‘s going a take time for the American public to know who she is.

BERNARD: I don‘t think she‘s going through a makeover. I think she‘s working very hard to reintroduce the American public.

Those women in Iowa loved her.

WALSH: They did.

BERNARD: There were stories that you could read about her getting on the telephone with wives in Iowa, explaining how her life was very similar to theirs. And I think what she needs to do is tell the American public her story...

MATTHEWS: Yes.

WALSH: ... and her life, so that people aren‘t terrified that this black woman is going a be doing God knows what in the White House.

MATTHEWS: Joan, last word.

(CROSSTALK)

MATTHEWS: We‘re in a new era here. We don‘t know the rules of engagement, because it seems to me, in the old of politics, I was told, never criticize a politician‘s spouse or family, because it always comes back to bite you. But when you have one spouse going after another spouse, I wonder whether that‘s fair game or not.

I don‘t know.

WALSH: I would like to see that not happen. I would like to see that not happen.

And I would also say, you know, like Michelle says—Michelle—excuse me, like—yes, both Michelles. We have got two Michelles.

(LAUGHTER)

WALSH: We have got a—we have got a situation where this woman may be a sharper social critic. She‘s never run for president before. She‘s never run for office. She‘s not the candidate. She‘s learning to express herself more clearly.

Chris, certainly, you and I have had our times when we have had to restate and come back at something.

MATTHEWS: Yes.

WALSH: And I certainly give her the benefit of the doubt, as she tries to do that and become a public person, because she‘s an asset to the campaign.

Our Rebecca Traister, who traveled with her in Iowa, said, those women fell in love with her. So, I think this is a bump in the road.

MATTHEWS: What a year. What a year this is. What a brand-new year.

Anyway, thank you, Michelle Bernard.

Thank you, Joan Walsh.

Up next: Who‘s the possible Obama running mate who shared the stage with John McCain? Admittedly, he‘s been a long shot from day one. But he shows up on the other stage. That‘s next on the HARDBALL “Sideshow.”

Now, it‘s no surprise that Donald Rumsfeld has been keeping a low profile after being ousted from office. Well, when the Capitol Hill newspaper “The Hill” caught up with him, Rumsfeld made a point of not endorsing John McCain, saying he hasn‘t been following the presidential election and was focusing instead on his private foundation. Well, that could be part of it, or it could be this.

(BEGIN VIDEO CLIP)

J. MCCAIN: I think that Donald Rumsfeld will go down in history as one of the worst secretaries of defense in history.

Now to General James Jones, who has got a ting of buzz as a potential V.P. pick for Senator Obama, one who could bring experience and, of course, military credentials to the Democratic ticket.

Well, it looks like all that ‘08 talk has gotten the general out there on the campaign trail after all. Check this out.

(BEGIN VIDEO CLIP)

J. MCCAIN: We have some distinguished guests here today. And they will be introduced later on. But one of them is a son of Missouri who went on to become our supreme allied commander in Europe, the head of our NATO forces, served in every war that this nation engaged in. And that‘s my dear friend General Jim Jones.

(END VIDEO CLIP)

MATTHEWS: Well, that was the general out with Senator McCain, of course, yesterday in Missouri. I‘m not so sure that being out with McCain is going a put him on Obama‘s list for V.P.

The new “Republic” magazine profiles a potential McCain number two in their new issue, writing about this conservative governor—quote—“In the classic Reagan Democrat mold, he‘s coupled his populism with a social conservatism nourished by his Catholic upbringing with an abortion right-to-know law and efforts to ban gay marriage and ease restrictions on concealed weapons.”

Now, who is this regular guy politician that could give McCain a boost from conservative? Minnesota Governor Tim Pawlenty. Pawlenty is currently in the middle of his second term as governor. Would he opt out for the vice president‘s office? Would he go for V.P.? We will see.

By the way, the name of that ticket is going to be good and Pawlenty.

And now for the HARDBALL “Big Number.”

Senator John McCain and President Bush were out in Iowa, today—that‘s today—touring areas hard hit by the flooding. So, you would think the presumptive GOP nominee and the sitting Republican president would make a joint appearance, right?

Wrong. In fact, it seems like the two made a point of staying away from one another. So, just how close did the two guys get, McCain and Bush? Within 35 miles of each other. President Bush was in Iowa City, and Senator McCain was in Columbus Junction, just 35 miles apart from each other.

It looks like McCain wanted to make sure there would be no photos with Bush at the scene of a natural disaster -- 35 miles, tonight‘s “Big Number.”

Up next: Is America ready to move past partisanship? Our next guest, Obama adviser and former U.S. Senator from Oklahoma David Boren, says we have to get past partisanship if we want to regain—and remain strong in this world. I will ask Senator David Boren about that and the 2008 race he‘s gotten into.

Stocks rose in large part today because oil plunged. The Dow Jones industrial average managed to snap its losing streak, gaining 34 points. The S&P 500 saw a five-point gain. And tech stocks really a beneficiary of today‘s trade, adding 32 points to the Nasdaq.

Oil fell $4.75, closing at $131.93 a barrel—that after China made a surprise announcement that it‘s raising domestic fuel prices 17 percent to 18 percent, effective tomorrow, a move that could cut demand significantly and help lower prices worldwide.

Two former Bear Stearns hedge fund managers were arrested and charged with lying to investors about the health of two funds tied to the subprime mortgages. Those funds imploded, one reason why the subprime mortgage crisis arose. Separately, the FBI announced 400 arrests in a nationwide sting targeting mortgage fraud.

And United and Continental Airlines agreed to form an alliance linking their ticketing networks and other operations worldwide. The two airlines decided in April, though, not to officially merge.

That‘s it from CNBC, America‘s business channel—now back to Chris and HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

Barack Obama met with some of the most experienced hands in national security just yesterday here in Washington. He calls the group his Senior Working Group on National Security. And he says he intends to consult with them between now and the general election in November, among them, former Oklahoma Senator David Boren, who is author of “A Letter to America.” He‘s also president of the University of Oklahoma, a Sooner.

What‘s the biggest threat? When you go to bed at night, and you worry, and you have to advise Barack, what worries you? Is it the Taliban coming back in Afghanistan? Is it China? Is it Iraq never getting over with? Is it Iran getting the bomb? What is our biggest worry the next four to eight years?

One is the more immediate. And, of course, Iraq, I think, you have to say, is the more immediate. And it‘s one of the things he asked us about in the meeting that we had with him, because, as long as all of your attention is focused there, as long as your resources are there, as long as you‘re spreading a trillion dollars there, as long as you‘re spreading yourself so thin that you can‘t even react to other crises anyplace else of any kind, you really are hamstrung.

So, you have to figure out how you extricate ourselves from the foreign policy mistake we have ever made. But there‘s a bigger question, Chris. And I think this is the one that he really needs to think about. This is not the kind of world we have all lived in, in the past, where—where there were two big powers, like in World War II, or us fighting the communists in the Cold War.

This is—this is not our grandfathers‘ world. This is a brand-new world. And you have all these powers. You have China and India. They will equal us economically in 20 years. But they have 10 times our population. They could equal us militarily. You go on and on and on.

So, you need a new kind of leader. And that‘s what attracts me to Obama. And he understands something. He understands you have to lead through partnerships, not my way or the highway, not with the American taxpayers paying everything themselves.

You know, you compare the first Gulf War, you really have to hand it to Bush Sr. Do you know how much it cost us financially? Zero. We were fully reimbursed.

MATTHEWS: The Japanese and the Germans...

(CROSSTALK)

MATTHEWS: ... checkbook powers.

BOREN: The Japanese and others—the checkbook powers.

They reimbursed us. Look at this, vs. a trillion dollars. And you think about what that‘s done to our economy, what that means to us at home.

He understands you need to form partnerships. You need to share burdens, that, if we keep on trying to do everything by ourselves, like we did in the old world that we lived in, where there were only two powers, or maybe even one, we‘re going to fail.

MATTHEWS: OK. Let me do devil‘s advocate.

The people who say, nice world view, very sophisticated. It‘s very state of the art. But, when it comes down to the short hairs, to the tough questions of our time, are you going to be any different on Iran than Bush? Is your candidate going to be—when Iran develops—when they get—when they develop weaponization, perhaps of a nuclear weapon, what are you going to do about it, anything different than Bush?

BOREN: I think he will be. For one thing, he realizes we have more than just one tool. We must always be militarily the strongest nation in the world. I think that‘s necessary. We always have to be able to reach for that tool if we need it. But it ought to be a last resort.

We need to relearn—you think about the British. Look how small they are really in size, in numbers, the economy. Yet, they‘re still very influential in the world. Why? They know how to use diplomacy. They know how to use it well.

He understands that. He understands there are a lot of things you can do. He also understands, again, don‘t do it all by yourself.

MATTHEWS: Would you go to a room with Ahmadinejad in Iran and talk to him, man to man? Would you give him that kind of stage?

BOREN: I would wait to see what the situation is at the time. I think that‘s what he‘ll do. He also realizes there are other centers of power in Iran. There‘s not just Ahmadinejad. There are others. There‘s the Ayatollah.

MATTHEWS: I‘ve got to ask you a last question, because I worry about.

Everybody complains, as they should, because it‘s brutal to go to work now. Sometimes you wonder if you‘re going to make any money when you get to work, because it costs you so much in gas. The Chinese could probably buy gas at 20 bucks a gallon they‘ve got so much of our money. They could buy every tree in America right now, they‘ve got so much of our money. What are we going to do about that?

BOREN: Well, that‘s why I go back to burden sharing. We have put ourselves in this position because we thought we could pay for everything, every problem in the world ourselves. And we can‘t do it. We‘ve in the course of it not only destroyed our standing in the world, we‘ve destroyed our economic independence, and our economic strength here at home. So, yes, the thing I really like about Obama is, he—first of all, he‘s the only one of the candidates who has good judgment, made the right decision.

MATTHEWS: Who‘s smarter, Bush or Barack?

BOREN: I think that Barack has one of the highest IQs that I‘ve ever observed in American politics. The other good thing is—and this is a real test of politics. He knows what he doesn‘t know. He knows what he doesn‘t know. I think that‘s why he had that meeting, and why he‘s put together this group that includes former secretaries of defense and secretaries of state. It‘s a good thing.

MATTHEWS: President Boren, president of University of Oklahoma; your book‘s called “A Letter to America.” I think you gave us a piece of it. Thank you very much, David Boren.

Up next, Barack Obama flexes his muscle with a new ad out there in 18 states, including several red states. Can Obama redraw that red/blue map and stretch McCain‘s money? Make him spend some money out west? He may be more ambitious than that still. Anyway, the HARDBALL politics fix is next. This is HARDBALL, only on MSNBC.

MATTHEWS: Welcome back to HARDBALL and the politics fix. Tonight‘s round table, Lynn Sweet of the “Chicago Sun-Times,” who knows Barack Obama better than anybody, Eamon Javers of Politico and Ed Gordon of Our World with Black Enterprise. Let‘s all take a look at a commitment made in 2007 by Barack Obama. Can we look at the full screen of what he said?

Here‘s what he said. Let‘s take a look—here‘s what Senator Obama had to say in a 2007 questionnaire for the Midwest Democracy Network, quote, “my plan requires both major party candidates to agree on a fund-raising truce, return excess money from donors and stay within the public financing system for the general election.” OK. There we go. He‘s not going to do that. He has reneged. Is that simple?

LYNN SWEET, “THE CHICAGO SUN-TIMES”: He‘s not going to do it. They had a choreographed rollout today, big e-mail to the supporters, big briefing for reporters. I‘m a little—it doesn‘t help the Obama brand, which they guard so preciously, to not have, I think, a better frame for going back on this. What they fell back to today is that the lawyer for the Obama team had a discussion with the McCain lawyer and something happened that—the McCain people disagree. Let me tell you what‘s happening right now, there‘s a big mess over what was said. That can‘t be the excuse.

MATTHEWS: Here he is. Here is—John McCain announced today that he‘s taking campaign public financing. He‘s limiting himself to the federal amount, which is about 80 -- let me give you the number. It‘s 84.1. The other guy is breaking his word apparently. Here‘s what he said earlier today about Obama‘s decision not to go along with what he said, which was to stick to public financing.

(BEGIN VIDEO CLIP)

MCCAIN: Senator Obama‘s reversal on public financing is one of a number of reverses that—on key and important issues that he has taken. I‘m especially disturbed by this decision of Senator Obama‘s, because he signed his name on a piece of paper. He signed his name on—

This election is about a lot of things. But it‘s also about trust.

It‘s also whether you can take people‘s word.

(END VIDEO CLIP)

MATTHEWS: Is it as simple as that, Eamon Javers, that he did sign on a piece of paper last year that he would go along with public financing, limiting the cost of this campaign, and now he‘s not going to do it?

EAMON JAVERS, POLITICO: Absolutely. The hard truth here is that Barack Obama signed his name on that piece of paper back in 2007, well before he developed this gargantuan Internet fund-raising machine. With that kind of fund-raising tactics, the kind of fund raising tactics he showed in the primaries, he could raise hundreds of millions of dollars in the general election cycle going into November. For him to cut back on that and take 84 million dollars, his advisers have clearly decided would be crippling to his chances. They just can‘t give up that advantage.

ED GORDON, BLACK ENTERPRISE: Of course, he broke his word, Chris. As they were saying, it was a weighty issue of whether you deal with the hypocrisy of breaking your word or whether you go to the money‘s milk of politics, and that is the sheer machine they became. They struggled with this. They weighed this. They knew they would take a hit. They knew, in their heart, that the money is what he‘s going to be able to do when he goes into these swing states and use to make McCain step up. If McCain sticks to what he suggests there, there‘s no way he‘s going to be able to keep up in buying commercial time.

MATTHEWS: Isn‘t this what some people would call Clintonian?

GORDON: Absolutely. Absolutely. And we know that the Obama camp has been stalwart in suggesting that they‘re change. They‘re going to be different. They stumbled into the same old, same old here. But again, money makes strange bed fellows and makes you do strange things sometimes.

JAVERS: This is totally tactical. It‘s a cost/benefit analysis, right? The Obama people knew they would take a couple of days—

MATTHEWS: Is every time you break your word a cost/benefit? Usually the benefit of your brand, as you call it, your good name, is worth more than any good deal you can cut.

JAVERS: They decided that 100 plus million dollars more in the bank might help them a little more than a couple days of bad press in June.

MATTHEWS: You follow this. I want a little capsule here. How does this fit with the way he behaves? Is this tactical turn, as you call it, this breaking of principle, breaking of word, which we agreed he‘s done, at least technically here, is this classic or unusual for him?

SWEET: I say this and I‘m just being historical and I‘ll be quick. He has in the course of running for—since he‘s been senator, he decided to open up fund-raisers. They were closed when it was something that he thought would be important. He didn‘t come to this naturally. He makes decisions as he needs to. I would think—it‘s a tactical decision. It is something that he saw coming. And I think they‘re going to try to sell it as that this army of micro-donors is the same as public financing. As you know, it‘s not the same. That‘s how they will try and be explaining it.

SWEET: No, they are. In fact, there‘s a meeting in Chicago tonight at their National Finance Committee, which is the fat cats.

MATTHEWS: So they‘re going to them too?

SWEET: Of course they are. Ethyl Kennedy had a big fund-raiser in her home last night. Warren Buffet is having a 28,000 dollar per person event.

MATTHEWS: So is this the old politics with a new barrel?

JAVERS: Absolutely. And what they‘re doing is they‘re ramping up their Internet fund raising. Even today, as he‘s making this announcement, they put up on their website, declare your independence.

MATTHEWS: Let‘s hear from the public. I‘m sure we‘ll hear on the blogs what we say here. It sounds like he‘s changed his tune. We‘ll be right back with the round table for more of the politics fix. Barack Obama is now going to raise as much money as he can. He‘s going to forego public financing, something he had promised before that he would abide by, the limits of public financing. He ain‘t going to live by them. You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: We‘re back with the round table for more of the politics fix. Here‘s Barack Obama, today, announcing his decision not to limit himself to public financing. It‘s a video message to his backers.

(BEGIN VIDEO CLIP)

OBAMA: We made the decision not to participate in the public financing system for the general election. This means we‘ll be forgoing more than 80 million dollars in public funds during the final months of this election. It‘s not an easy decision, especially because I support a robust system of public financing of elections. But the public financing of presidential elections, as it exists today, is broken and we face opponents who have become masters at gaming this broken system.

GORDON: It‘s a bit of both. He‘s right in the sense that this needed to be fixed. He‘s wrong in the sense that in the beginning he suggested that he didn‘t want to put the burden on the people, but that was, as we discussed before, long before he saw that he was going be the money machine that, heretofore, we have not ever seen in the history of politics. He wasn‘t going to forego that kind of money.

MATTHEWS: Does this suggest he‘s an opportunist like other politicians, including Senator Clinton and the Clintons?

SWEET: This one‘s pragmatic because of the amounts of money. I would just like to make the quick point that he also had—the Republican National Committee, which can spend money on behalf of McCain, has millions of dollars more than the Democratic National Committee. Plus there are these third-party group. but all that was pretty well known at the time he made the pledge to try and seriously try and make a deal with McCain.

MATTHEWS: This will protect him from 528s?

SWEET: Maybe.

MATTHEWS: All right, we‘ll be right. Let‘s take a look right now at the 60 second ad. This is the full ad he‘s running now in 18 states. Barack Obama.

(BEGIN VIDEO CLIP)

OBAMA: I‘m Barack Obama. America is a country of strong families and strong values. My life‘s been blessed by both. I was raised by a single mom and grand parents. We didn‘t have much money, but they taught me values straight from the Kansas heartland where they grew up; accountability and self-reliance, love of country, working hard without making excuses, treating your neighbor as you‘d like to be treated.

It‘s what guided me as I worked my way up, taking job and loans to make it through college. It‘s what led me to pass up Wall Street jobs and go to Chicago, instead, helping neighborhoods devastated when steel plants closed. That‘s why I pass laws moving people from welfare to work, cut taxes for working families, extended health care for wounded troops who had been neglected.

GORDON: All of the above. It‘s a preemptive strike. He knows what the Republicans are going to go after when they start to hit him hard. He‘s letting everyone know that he‘s patriotic as the next guy. He just needed Ray Charles singing “America.” That‘s all.

MATTHEWS: Do you think he‘s right or wrong to sell his history, his mixed background, ethnically? Is that OK with everybody?

GORDON: Yes, it‘s who he is. I don‘t think there‘s any problem. You can‘t walk away from who you are. You dance with who brought you.

MATTHEWS: In this case, literally, born you.

JAVERS: Listen to some of the code words that are in there, or some of the words they are emphasizing in that, faith, blessings, love of country. There‘s a lot of patriotism and religious overtones to this message he‘s putting out there. Barack Obama is clearly trying to sell himself as somebody who can reach out to the average person.

MATTHEWS: You mean he‘s not a secular, University of Chicago elitist?

JAVERS: Which is what they are desperately afraid. The McCain people are going to tag him as a limousine liberal. So he‘s out there trying to emphasize this idea that he had a single mother.

SWEET: They‘re going to attack him on that. This is all part—nothing happens in a vacuum. So this is going to be packaged with another reintroduction of Obama. He has run on his biography so much. Later this summer, he‘ll be taking a biographical tour of the nation to go to the places that were important in his. This is all part of, once again, a man running largely on his biography.

MATTHEWS: Bill Clinton did the same thing. He reintroduced himself as a poor boy from Hope after everybody thought he was an Ivy Leaguer, same deal. Lynn Sweet, Eamon Javers, Ed Gordon, thank you, as always. Join us again tomorrow night at 5:00 and 7:00 p.m. Eastern for more HARDBALL. Right now, it‘s time for RACE FOR THE WHITE HOUSE with David Gregory.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

END

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